2016 (3) TMI 777 - AT - Central Excise

Manufacture - complete food tray as served to the passengers on board the aircraft - edible preparations bearing the brand-name - sustainability of demand for extended period and penal action against the appellant - Held that - Out of Food preparations as contained in the food tray served to the passengers on board, admittedly, the appellants did prepare dal, roti, rice, curry etc. and supplied the same in trays and bowls covered with aluminium foil. However, these are not the items on which Central Excise duty is sought to be demanded. The Central Excise duty was said to be demanded on the full value of the final complete food tray as served to the passengers on board the aircraft. There is nothing in the impugned order which will substantiate and support the claim of the Revenue on the taxability of such complete food tray on whole value. As such we find that the demand is not sustainable on this ground. Regarding the brand-name, we find that the Original Authority found that the appellants are supplying food preparations with brand-name to the airlines. Admitted facts are that the food prepared by the appellants is supplied without brand-name. In separate tray is the cutlery pouch which contains the label with logo and name of the appellant. The same is supplied separately. These are put together by the airline staff and served to the passengers. In any case since the Department has not established the sustainability of the demand on the ground of manufacture, this aspect on brand name is not further examined by us There is no supporting evidence to allege fraud, suppression with intend to evade payment of duty on the part of the appellants. In a similar matter, where appellants were one of the parties in appeal, the Tribunal in the final order 2015 (10) TMI 2400 - CESTAT MUMBAI held that the appellants are providing in catering service to various airlines is very well known fact. In fact catering to the airline is their main business, and no such similarly placed caterer was paying excise duty on such meals. The Tribunal accordingly, held that it is difficult to say that there was suppression of fact or wilful misstatement of facts or intention to evade payment of duty. We find in the present case on a similar situation the demand after many years of the impugned period is not sustainable in view of the facts and circumstances of the case. As such, we find the impugned order is not sustainable both on the question of manufacture and on time bar. - Decided in favour of assessee

Summary

Issues:
1. Whether the appellants are engaged in the manufacture of edible preparations bearing the brand-name during the impugned period?
2. The sustainability of demand for extended period and penal action against the appellant.

Analysis:

Issue 1:
The appeal challenged an order by the Commissioner of Central Excise regarding the taxability of food preparations supplied by the appellants to airlines. The appellants contended that placing various food items in a tray did not constitute manufacturing a new commodity. They argued that the items were supplied separately to airlines and combined by airline staff before serving passengers. The Revenue claimed the entire tray was a branded food preparation. The Tribunal found the Original Authority did not analyze the nature of the manufacture undertaken by the appellants. The demand for excise duty was based on the entire food tray served on board, ignoring that some items were supplied by the airline and others were not subject to excise duty. The Tribunal concluded that the demand was not sustainable as the appellants did not manufacture branded food preparations.

Issue 2:
Regarding the demand for an extended period, the show cause notice alleged suppression of facts by the appellants. The Original Authority upheld the demand, citing the appellants' registration with the Central Excise Department. However, the Tribunal found no evidence of fraud or suppression to evade duty. It noted a previous Tribunal order in a similar case where no duty was imposed on caterers supplying meals to airlines. The Tribunal ruled the demand after many years was not justified, given the legal interpretation nature of the dispute. Consequently, the impugned order was deemed unsustainable on both the manufacturing issue and the time bar, leading to the appeal being allowed.

This detailed analysis of the judgment highlights the key legal arguments, findings, and conclusions made by the Tribunal in response to the issues raised in the case.